Differentiation needs to be on some fundamental "boots on the ground" level.
We are talking unique spells, unique weapon types, unique equipment, unique unit abilities, unique champion 'learn-able' abilities (see Path of Necromancy)
-> All these things we need.
Boots on the ground is the most important aspect of Faction variability. Do you know what else changes boots on the ground, other than having unique "unit capabilities"?
Unique economies. We already have Faction traits like "Endless Horde" and "Master Smiths" ... we just need to expand more on this.
FACTION TRAITS SHOULD NOT BE FREE TECHS
EVERY civilization should get a different free tech. This should be a separate beast from faction traits .... Maybe a barbaric faction or two could have no free techs, but only if there is a really good reason/justification for it.
The reason? Free techs don't have the same impact as TRUE faction traits.
-> Yes, I like some of Sarudak's ideas about Techability differentiation ... because the CURRENT WAY WE HANDLE FREE TECHS HAS NO IMPACT.
Therefore, I think it'd be best if each nation gets a free tech (or two) along their given specialty ... and for that to just be a SMALL PART of what makes each faction different.
----> Other things include unique economic buildings, unique 1-per-faction buildings, unique food buildings even!
Quendar and Urxen could have more +Food buildings for more slaves/peons.
->Quendar could have slave pens without the growth penalty
->Pariden could have buildings that reduce production AND gold, while increasing research.
->Resolyn could have more ways to sacrifice population for magical (and other types of) power.
-----> Resolyn could be the Death Dealers AND the Vampires
------> Urxen could be the dragon worshippers AND the orcish horde
------> Trogs could be the powerful warrior race (uruk-hais?), with some form of Mycenean form of "competition/Aristea" ... like Agamemnon and Achilles. Not sure how this would be implemented ... exp from damage? More exp from combat? More unit exp?
and maybe Trogs could build both regular trogs and OGRE trogs ... much bigger, sort of like a permanent "growth" spell was cast on such units. Unable to ride mounts, these larger units. Like picking a trait ... you'd pick whether a unit was a regular trog or an OGRE trog.